Outlook: Railtrack making money- and foes

RAILTRACK HAS taken over from British Gas as the company everyone loves to hate. It's all fine and dandy for those foresighted enough to have bought shares in its flotation; the value of their investment has more than tripled in three years. But from a public interest perspective, privatisation seems to have failed. Profits are rising strongly at a time when standards of service are declining. This is not the way the market is supposed to work.

Unfortunately, the Government's proposed solutions scarcely look any better. John Prescott, in his haste to take a swing at this Aunt Sally, conveniently ignores the fact that the railways are in some respects victims of their own success with passenger journeys up 25 per cent since privatisation.

Instead he looks at the whopping subsidies Railtrack receives and thinks how much better the railways would run if the Government was in charge of paying them directly to Railtrack, rather than through the train operating companies. For some reason the chairman of Mr Prescott's Strategic Rail Authority, Sir Alastair Morton, thinks likewise although he really ought to know better.

Privatisation may not be running perfectly. But putting the SRA in charge of handing out the subsidy and dictating Railtrack's investment programme would be tantamount to returning to the bad old days of nationalisation.

In any event, subsidies are about to start falling rapidly on all franchises other than those rural networks where there will always be a social obligation to provide a service. So subsidy isn't going to remain much of weapon for long. If Mr Prescott really wants to improve the railways rather than score political points, then the sooner he and the new regulator sit down and negotiate a regime which gives Railtrack the incentive to deliver, the bette